VNTR Capital News Feb 6, 2023 - News, Events, VC Reads
Venture Capital, Web3, and Private Equity - Feb 6 News, Events, and VC Reads
Happy Monday! Have a great week ahead!
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Scroll down for VNTR Capital Community News, Upcoming Events, and VC News/Reads.
VNTR CAPITAL COMMUNITY NEWS
Almaty — Digital Almaty 2023 (Forum / Venture Day) was held last week in Almaty, Kazakhstan, where Yuri Rabinovich shared how investment syndicates work. We met with local members of the VNTR community in Kazakhstan and learned about the various activities to grow the startup and venture capital ecosystem.
Dubai — We are hosting a two-day VNTR Capital Investors Lounge in Dubai on Feb 8-9 together with TMRW Conference Dubai. VNTR Lounge will serve as a meeting point for investors and VIPs to connect, network, co-work, host meetings, and participate in interactive group discussions and events (fireside chats, debates, and daily happy hours). Please attend the VNTR Investors Roundtable on Feb 9 for roundtable introductions and discussions.
London — VNTR Investors Roundtable London will be held on Feb 8 during ICE London to provide a place for local and visiting investors to meet and explore co-investment opportunities.
Jerusalem — We are hosting our 1st Investors Roundtable in Jerusalem on Feb 16 as a side event to OurCrowd Summit on Feb 15. During our visit to Jerusalem, we will introduce top VCs to our Fund of Funds Syndicate Program — providing syndicate LPs access to top funds at smaller check sizes than required for direct LPs. For more information on our Fund of Funds Syndicate Program, apply here.
Barcelona — We look forward to kicking off our Barcelona investors community at the 1st Investors Roundtable in Barcelona on Feb 16 as a side event to European Blockchain Convention.
Join the VNTR Community Call today at 8 pm Dubai time when we will be introducing the VNTR PRO Membership. Please join by applying for community membership here. The first cohort of PRO Membership will kick off on Feb 13.
Companies who wish to join as event sponsors are welcome to apply here.
Thank you to our partners:
Crypto Hunters TV Show is a groundbreaking adventure-reality series that delves into the world of cryptocurrency. Our show offers a unique blend of action, entertainment, and education as our contestants embark on a thrilling worldwide journey to uncover the secrets of the crypto world. With a focus on accessibility and entertainment, we aim to bring the excitement of cryptocurrency to a wider audience. Rounding out our approach to untapped markets will be the Crypto Hunters Mobile Game App. The game will be intrinsically linked and prominently advertised through the Crypto Hunters TV show. Learn more and contact HK.
Changex is a unique personal finance mobile app that connects crypto and DeFi to the real world via in-wallet banking. The company is building a swiss knife financial solution by providing access to multi-chain crypto trading, proprietary products such as Leveraged Staking to leverage any POS asset, and a Crypto Debit Card for unprecedented utility. Learn more and contact Gary.
Upcoming VNTR Capital events:
Feb 8-9 VNTR Investors Lounge Dubai (during TMRW Dubai)
Feb 8 VNTR Investors Roundtable London (during ICE London)
Feb 9 VNTR Investors Roundtable Dubai (during TMRW Dubai)
Feb 16 VNTR Investors Roundtable Barcelona (during European Blockchain Convention)
Feb 16 VNTR Investors Roundtable Jerusalem (during OurCrowd Summit 2023)
Feb 28 VNTR Investors Roundtable Barcelona (during Mobile World Congress 2023)
Mar 11 VNTR Investors Roundtable Austin (during SXSW)
Mar 23 VNTR Investors Roundtable Paris (during Paris Blockchain Week)
Mar 30 VNTR Investors Roundtable Hong Kong (During Wow Summit)
RSVP to Upcoming VNTR Capital Events
The VNTR Capital Investors Community has a growing membership of 340+ qualified investors, actively investing in high-growth technology companies as VC/Crypto Fund managers, angel investors, and family offices.
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UPCOMING VC EVENTS
Feb 8-10 TMRW Dubai, UAE
Feb 9-11 World Artificial Intelligence Cannes Festival, Cannes, France
Feb 16-17 Blockchain Fest, Singapore
Feb 24 - Mar 5 ETHDenver, Denver, USA
Feb 27-28 Blockchain Life 2023, Dubai, UAE
Feb 27 - Mar 3 Mobile World Congress, Barcelona, Spain
Feb 27 - Mar 5 Miami Web3 Week
Feb 27 - Mar 2 4YFN 2023, Barcelona, Spain
Mar 1-2 Affiliate World Dubai, UAE
Mar 1-5 Dubai International Boat Show
Mar 10-19 SXSW, Austin, USA
Mar 13-16 AIBC Eurasia, Dubai, UAE
Mar 13-15 FinTech Week Tel-Aviv, Israel
Mar 15-17 sTARTUp Day 2023, Tartu, Estonia
Mar 19-20 Crypto Expo Europe, Bucharest, Romania
Mar 20-24 Paris Blockchain Week, Paris, France
Mar 20-21 World Blockchain Summit Dubai, UAE
Mar 23-25 Art Basel Asia, Hong Kong
Mar 29-30 WOW Summit Hong Kong
Apr 11-12 Startup Grind, Silicon Valley, USA
Apr 26-28 Consensus by CoinDesk, Austin, USA
Apr 27-28 TechChill, Riga, Latvia
May 15-19 AIBC Americas, Sao Paolo, Brazil
May 24-25 Next Block Expo, Warsaw, Poland
May 30 - Jun 4 Tech Week San Francisco, US
May 31 - Jun 2 GITEX Africa, Morocco
Jun 7-9 South Summit, Madrid, Spain
Jun 9-10 Epic Web3, Lisbon, Portugal
Jun 12-13 Metaverse Summit, Paris
Jun 14-17 Viva Technology, Paris
Jun 26-29 Collision, Toronto, Canada
July 6-7 Block3000, Lisbon, Portugal
If you would like to submit VC-related events, please respond to this email or Telegram @byuric
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Check out VNTR Capital upcoming events
VNTR Investment Platform streamlines participation in VNTR investment syndicates. You can view the investment opportunities and co-invest in a few clicks.
The 10 Biggest Rounds Of January: OpenAI Starts Out The Year With A Big Bang
The new year did not start slowly, as U.S.-based startups saw five rounds of more than $200 million. Of course, all the talk was about OpenAI’s huge strategic raise, but health care, cybersecurity and renewable energy startups all saw large raises last month as investors wrote big checks. OpenAI, $10B, artificial intelligence: The deal had been rumored for weeks, but was finally made official. Microsoft confirmed it has agreed to a “multiyear, multibillion-dollar investment” into OpenAI, the startup behind the artificial intelligence tools ChatGPT and DALL-E. The exact dollar amount was not confirmed, but Semafor reported earlier last month that Microsoft was in talks to invest as much as $10 billion. The deal follows a $1 billion investment in 2019 from Microsoft into the AI startup. It will help position Microsoft in what will be an all-out battle for AI dominance with other tech giants such as Alphabet and Amazon. Earlier this month The Wall Street Journal reported the startup could be valued at $29 billion thanks to a new tender offer.
In 2015, Elon Musk, alongside Sam Altman and other prominent Silicon Valley leaders, including Peter Thiel, Linkedin co-founder Reid Hoffman and India's former Infosys chief Vishal Sikka among others, pledged $1 billion to set up OpenAI Inc, a non-profit AI research organisation, and the parent company of OpenAI LP, a 'capped-profit' company, institutionalised in 2019, to accelerate AI research and talent development.
Interestingly, it has successfully produced tech entrepreneurs, who are now leading cutting-edge projects across industries. This includes Anthropic, Pilot, Covariant, Adept, Living Carbon, Quill (acquired by Twitter), Daedalus, and others. In the last five years, close to 30 employees have left OpenAI to start their own AI ventures – aka 'OpenAI Mafia,' a large majority of them belong to senior to mid leadership roles.
Morgan Stanley's $2.5B fund keeps secondaries momentum rolling
Morgan Stanley Investment Management has wrapped up a $2.5 billion secondaries fund, providing yet more evidence of investor appetite for vehicles that offer LPs an exit avenue from their private equity commitments. Ashbridge Transformational Secondaries Fund II is about four times larger than Fund I, which closed in 2018 on $674 million. Fund II focuses exclusively on single asset GP-led continuation vehicles in the middle market. Continuation vehicles have gained momentum as a way to give investors liquidity as interest rates remain high and LPs apply pressure on their managers to show returns for their longer-term, private market commitments—a difficult mandate in a deteriorating exit environment. In 2022, exits saw a drastic drop in activity, plummeting 66.3% in total deal value year-over-year, according to PitchBook's 2022 Annual US PE Breakdown. GP-led continuation vehicles offer an alternative exit option to traditional routes, like a public listing or a sale, and permit GPs to hold onto trophy assets they don't want to sell at a discount in the current marketplace. To create liquidity for their LPs, GPs can drop those assets into a continuation vehicle on the secondary market. LPs can then cash out or roll their capital into the new fund.
Why VC valuations look too high to limited partners
Jeff Nasser has been spending a lot of time lately explaining to his institutional investment clients why tech stocks crashed by as much as 80% since 2021 highs, while VC portfolio losses are only averaging in the single digits. The answer is straightforward when addressing the discrepancy over the short-term: Stocks are repriced continuously, but startups are valued only when a new funding round occurs. But over time, public and private market valuations should start converging. Under fair-value accounting standards, venture firms, just like other private market asset classes, are required by the American Institute of CPAs to review underlying investments each quarter to ascertain whether the value of portfolio companies has increased or decreased in the current economic environment. The valuations that VC firms have been providing their LPs show that private market prices are still far from catching up to the steep drops of their public equity counterparts.
Here's What You Need to Know About the Changing Face of Venture Capital
Picture a venture capitalist. You might imagine an older white man in a suit, maybe with a gray beard. But the reality is that the VC landscape is changing — rapidly. Today, VCs are getting younger and more diverse. The rise of Gen Z angel investors perfectly illustrates this shift.
There are more than 20,000 Gen Z angels investing in startups globally. And they're putting their money into some of the most innovative companies around, from the Web3 space to clean energy. On a broader level, recent data shows that the average age of the typical VCT investor has dropped by 11 years since 2017. What's driving this trend? For starters, everyone under 58 is seeing the highest inflation of their adult lives. At the same time, young people have never seen healthy bond yields or bank deposit rates. The stock market offers little in the way of safety or stability, either, with millennials experiencing three "once in a lifetime" crashes in the last 20 years: the dot-com bubble, the financial crisis and Covid-19. Today's bear market, too, is at risk of turning into a worse crash.
The Why of Tech Layoffs
It shouldn’t surprise anyone that “tech layoffs” have been on my mind, and I wrote a column for The Spectator to explain “the why of these layoffs.” An unprecedented boom in Silicon Valley that started with the once-in-a-generation convergence of three mega trends: mobile, social, and cloud computing, has peaked. It started in 2010, and it has been bananas around here for the past decade or so. The FAANG+Microsoft companies saw their revenues go from $196 billion to over $1.5 Trillion. Let that sink in. Booming stocks helped create an environment of excess like never before.
Signs that a Startup is Going Bad
When money was easy, everyone looked like a genius and even the worst run companies could put up some numbers. But in early 2023, we are now in the midst of a tech recession if not a general economic recession.
As Buffett would say; the tide has gone out, and now we see who has been swimming naked.
VC funding to Black web3 founders popped last year, bucking trends
Much hope remains after the crypto winter almost froze the sector: the Luna crash, the bankruptcy of Celsius and the arrest of FTX founder Sam Bankman-Fried for alleged fraud. Then there was the venture pullback amid an economic downturn. In 2021, web3 startups globally raised a record $29.2 billion. By 2022, that number dipped to $21.5 billion — though that’s still much more than the total $4.8 billion and $4.2 billion such companies picked up in 2020 and 2019, respectively. Black people who invested in crypto were hit disproportionately hard during the winter, though many Black founders and investors who spoke to TechCrunch remain optimistic about the sector’s potential for the community and society overall. If anything, last year’s economic correction was necessary, they told TechCrunch.
AI In 2023: A Year of Reckoning In The Enterprise
If you go by the headlines, 2022 was a breakout year for AI. Every week, it seemed there were articles about generative AI showcasing the technology’s ability to create amazing artworks, essays and graphic designs seemingly out of thin air. There were stories about AI companies raising hundreds of millions of dollars despite the downturn. AI was everywhere. But as an investor in AI and automation companies for the last decade, I’d say, “We’re just getting started.” Underlying technologies have advanced to a point where AI is now useful for most industries, and the cost to deploy it has reached a point where real ROI is possible. But we’re still in the early innings.
Why Venture Capitalists Won’t Be Held Accountable for Investing in FTX
The list of FTX investors who in aggregate invested over $2 billion, and subsequently had to write it all off, spans an impressive “who’s who” of well-known investment firms, including NEA, IVP, Third Point Ventures, Tiger Global, Insight Partners, Sequoia Capital, SoftBank, Lightspeed Venture Partners, Temasek Holdings and BlackRock. It also includes the Ontario Teachers' pension fund, one of Canada's largest pension funds, with nearly $250 billion in assets under management. It will write down the entirety of its $95 million investment in FTX. That’s quite a lot of money flowing into an organization that had an accounting firm in the metaverse, no board of directors, a questionable corporate domicile and was highly leveraged from the very beginning, among a list of other “red flags.” So, what gives?
After Microsoft’s OpenAI play, a feast at the generative AI buffet
A few weeks ago, Microsoft fired the largest volley in the generative AI wars when it announced a partnership with OpenAI and an investment to the tune of $10 billion. That deal, unprecedented for the space, catapulted the company's valuation to $30 billion and sent investors scrambling to back the next major AI startup.News broke Friday that two other generative AI startups are seeking hundreds of millions of dollars at unicorn valuations. Character aims to raise $250 million, easily putting its valuation past $1 billion, The Information reported. The startup was formed by two former Google researchers and is similar to OpenAI's ChatGPT chatbot in that it allows users to have conversations with an AI that can assume different characters, including famous fictional personalities like Tony Stark and Walter White. Character reportedly raised a seed round at an undisclosed valuation and has received backing from Gmail creator Paul Buchheit and former GitHub CEO Nat Friedman.
Spain breaks its record for PE deal count in 2022
Last year, Spain's private equity industry saw a record number of deals completed, despite the total capital invested in the country dropping. PitchBook data recorded 381 Spanish PE deals in 2022—a 12.4% increase from the previous year. Deal value was down by just over 35%, from €50.4 billion ($56.6 billion) to €32.6 billion ($35.3 billion), but it was still the second-highest year on record.Spain's robust deal-making comes as its economy makes a better-than-expected rebound. This month, the country recorded a 5.5% growth in GDP for 2022, with the last quarter showing 2.4% growth on the same period a year ago. PE in Spain last year lacked big bracket deals. Over 70% of deals were worth less than €1 billion, with no deals worth over €2.5 billion. By comparison, 34% of deals in Spain in 2021 were worth over €2.5 billion.
Explosive High Precision Impact Investing
Impact investing has become a force to be reckoned with. The amount of money invested worldwide with a filter for positive impact on humanity has grown by 40% just over the last two years to an annual total of USD $1.16 trillion, according to the 2022 Global Impact Investing Network report¹.
The most common framework² used by impact investors is known as ESG, which stands for Environment, Social, and Governance. In practical terms, it simply means that investors representing a rapidly growing part of all investable capital have been actively trying to invest a larger and larger percentage of their money into companies they view as having a positive impact on the world. In addition, these investors are avoiding investing in companies that they consider harmful, all without significantly sacrificing their expected returns.
Angel Tax may trim foreign funding in Indian Startups
Indian startups raising capital from foreign investors such as SoftBank, Sequoia Capital, Prosus, Tiger Global, KKR and Blackstone will now have to pay ‘angel tax’ in a move that could squeeze funding into the sector facing a liquidity crunch and prompt more startups to shift overseas. Finance minister Nirmala Sitharaman said in the budget speech that non-residents will now come under the purview of Section 56(2) VII B, also known as ‘angel tax’, which was introduced in 2012 as an anti-abuse measure aimed at tax avoidance.
Everyone Wants To Be An Accelerator
If you’re a new founder researching accelerators, the choices can look overwhelming.
Should it be regional or international? Is it better to spend a few weeks in a high-intensity program or commit to a couple years of close mentorship. Remote, hybrid or in-person? Industry-specific? A big program or a small cohort? Now, as accelerator programs regain their groove following a couple years of pandemic disruptions, it looks like the options are, if anything, getting even broader. In the past few months alone, we’ve seen brand-new and retooled accelerator programs roll out at a steady clip. Several are sector-focused, seeking to leverage advancement in hot fields like generative AI. Others are looking to build up entrepreneurship in metro areas not known as major tech hubs. Venture investors, always keen to get in on the new, new thing early, are also joining the fray. One motivation is a belief that the largest, big-name accelerator programs, and Y Combinator in particular, aren’t the best fit for founders seeking a more hands-on, long-term approach.
Germany launches €1bn fund for climate and deeptech scaleups
Germany has unveiled a new €1bn fund for deeptech and climate tech for growth-stage companies, dubbed the DeepTech & Climate Fonds (DTCF), to boost startups in Europe’s largest economy. It’s the newest big commitment to innovation from European states as the region’s policymakers pay closer attention to technological sovereignty and the strategic value of scaleups. The DTCF will invest in deeptech sectors such as Industry 4.0, robotics, artificial intelligence, quantum computing and process automation and in companies with a technology-based business model such as digital health, new energy, smart cities, new materials and selected biotech areas. So far, the fund has made one investment which is about to close, according to a press release from the Federal Ministry of Economy and Climate Protection.
New Unicorn Shuffle Thins Herd In Final Month Of 2022
More unicorn companies left The Crunchbase Unicorn Board in December than joined. In the final month of 2022, three companies joined the board whilst four dropped off and four exited. Three unicorns in the crypto space faced bankruptcy in December 2022; FTX, BlockFi and Celsius Network. And door-to-door delivery service Oda, based in Norway, left the board with a valuation below its prior billion-dollar value. We estimate that many more companies will drop off the board, if given a new valuation in 2023. Half of the 1,400-plus companies currently on the board are valued at $1.5 billion and under. Shenzhen-based hydrogen fuel cell vehicle company SFCC raised $647.5 million in a Series B funding valued at $1.9 billion. Founded in 2016, the company was incubated by SPIC (State Power Investment Corp.), one of the largest energy groups in China. It aims to support the ecosystem of developing hydrogen fuel cells, vehicles and refueling stations.
Tiger Global says India returns have ‘sucked historically’ but remain bullish
Tiger Global believes India is likely to produce the highest equity returns globally in the future, its partner Scott Shleifer said on an investor call Tuesday, projecting high confidence in the key overseas nation even as he admitted that the world’s second largest internet market has delivered below average returns for the investor giant historically and the local startup ecosystem is grappling with governance and unit economics challenges. “We think it will be the best place to invest,” said Shleifer of India at his rare appearance. “We were able to purchase 16 or 17% of Flipkart for $8 million in 2010,” he said of the investment in the e-commerce giant, which is currently valued at over $37 billion. “We were able to purchase 10% of [business-to-business commerce startup] InfraMarket for $8 million. We purchased a third of [investing app] Upstox for $50 million.” Both the firms raised capital in their most recent rounds at over $2.5 billion valuation.
India has 115 unicorns with a cumulative valuation of over $350 billion
India became the world’s third-largest start-up economy and also crossed the 100-unicorn mark in 2022. The country now ranks behind the US (661 unicorns) and China (312 unicorns). Despite the ‘funding winter’ Indian start-ups managed to raise $25 billion in capital, which was 2.2X the money raised in 2020, according to ‘The India Unicorns and Exits Tech Report 2022’ by Orios Venture Partners. However, compared to the highs of 2021, start-up funding declined by 30 per cent in 2022. Even start-up IPOs more than halved from 11 in 2021 to just four last year. The number of start-up acquisitions, meanwhile, fell from 250 to 229 last year. ShareChat-owned Moj acquiring MX Taka Tak for $600 million was the largest M&A, followed by Zomato’s $568 million-Blinkit buyout, and Lenskart’s $400 million-Owndays acquisition.
What's Holding DAOs Back?
In 2021, DAOs broke out of their blockchain confines and spilled out into the real world. Up until that point, most decentralized autonomous organizations stuck to managing financial protocols or stewarding digital assets. Buoyed by a set of new DAO laws in Wyoming, Vermont and Tennessee, a wave of crypto-collectives began pursuing audacious acquisitions of real-world assets including rare art, a golf course, a copy of the U.S. Constitution, a National Basketball Association team and real estate. However, it became evident as soon as DAOs collided with the real world that these powerful new vehicles for crowdfunding and organization are constrained by immense coordination and regulatory costs that can negate the benefits of using a DAO in the first place. By understanding these costs, entrepreneurs, researchers and regulators have the opportunity to help DAOs deliver on their promise to create a fairer internet.
Fiat is in ‘jeopardy’ but Bitcoin, stablecoins aren’t the answer either
The hedge fund manager instead wants to see an “inflation-linked coin” be brought to the masses which would serve to ensure consumers secure their buying power. Billionaire investor Ray Dalio has described fiat currency as being in serious “jeopardy” as an effective store of wealth but doesn’t believe Bitcoin and stablecoins will be the solution either. The founder of hedge fund firm Bridgewater Associates explained on CNBC’s Squawk Box on Feb. 2 that the mass money printing of the United States dollar and other reserve currencies has him questioning whether they are forms of “effective money.”
Stock Market Roller Coaster: Prepare for a Decade or Two of Disappointing Returns!
Investors who own index funds have likely strapped themselves into a giant stock market roller coaster which, to this point, has only gone up. I am very pessimistic about the returns from the average US stock over the next decade or two. If you owned index funds over the last decade, you were richly rewarded by the stock market. It is time for the payback. Investors who own index funds have likely strapped themselves into a giant roller coaster which, to this point, has only gone up. Over the next decade or two they will experience an exhilarating ride filled with mini bull and bear markets, but at the end of the journey they will not be far from where they started.
Is the Metaverse really turning out like ‘Snow Crash’?
Neal Stephenson’s science fiction novel Snow Crash predicted the Metaverse in 1992. This cult book has the amusingly-named Hiro Protagonist running around in an artificial cyber world, trying to stop a virus that wipes minds, aided by his hacker friend Y.T. Reality is a place to escape from, a neoliberal future wrecked by hyperinflation and inequality and run by corporations and gangsters and insane bureaucracy. In many ways, the book is horribly prescient. (It’s also horribly written in places, more like an info dump than a novel.) The Metaverse was a place where people had digital avatars, where they hung out with friends, went shopping and attended concerts. It was full of ads, the infrastructure was owned by a billionaire, and a virus was wreaking havoc on society. It all sounds familiar.